One of the great advantages of working for “the man” is retirement benefits, including the possibility of contributing to a 401(k) plan that offers you the chance to save for retirement with pre-tax dollars.

But are all 401(k) plans created equal? Certainly not. Right now, Fidelity Investments is being sued by some of its current and former employees due to the nature of its plan. According to the lawsuit, Fidelity’s plan funnels employees into investments that have high costs, and might not provide the best bang for the buck. (Fidelity plans to fight the suit, and counters that there are plenty of low-cost choices available with its plan.)

Seeing a lawsuit like this hit one of the biggest providers of workplace retirement plans in the country should make you wonder: How does your own plan stack up? Here are four red flags to watch for:

1. No Employer Match

Does your employer offer a match? While it’s not the end of the world if your employer doesn’t offer a match, the best plans definitely do. This is free money that goes into your account and can help it grow much more quickly than it would with your money alone.

Even if your employer offers a match, you do need to watch for vesting requirements. If you don’t meet certain qualifications, you might lose the match portion of your account when you change companies.

2. Limited Choices

Does your company 401(k) limit your choices? If you are limited to high-cost plans, or if the company requires that a large chunk of your contribution be allocated to company stock, that could be a problem. In some cases, the options are so bad that you are better off opening an IRA and forgoing a company match. You need to be able to properly diversify, as well as make sure you have access to low-cost plans.

3. Too Many Choices

While you want a fair number of investment options for your retirement portfolio, it is possible to have too many choices. A plan with a large number of investment options can cause decision paralysis in workers. If your plan has so many choices that you can’t properly compare them, it can get messy. A good plan has a solid offering of a few managed and a few index investments, spread across different sectors, as well as offering some solid all-market choices.

4. High Fees

Your real returns might be heavily eroded by high fees if you aren’t careful. You have to be aware of the fees charged by the plan itself, as well as the fees charged by the funds you invest in. You can limit some of the latter by choosing low-cost index funds and ETFs, rather than opting for their higher-priced managed counterparts.

Plan fees are another problem altogether. If your employer’s 401(k) comes with high fees, talk to the human resources department about finding a new plan administrator. If you aren’t careful, you could lose out on thousands of dollars in earnings over your lifetime, just because of the 401(k) fees you pay.

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It may make sense to consider whether the lure of delaying taxes until retirement, and all the liquidity restrictions that come with them, make 401-k Plans worthwhile at all. The Wall Street spin is that everyone’s taxes will be much lower in retirement which begs two questions, “Why, do you WANT to have less income at some point?” and “What if income tax RATES are higher (as most Americans think they will be) by the time you retire?”

The reason Congress likes 401-k Plans is that they received taxes on the (allegedly) large harvest, rather than on the smaller seed. The reason Wall Street likes 401-ks is that its salespeople get a recurring batch of new money on which to charge fees and commissions. Were the majority of money managers able to beat the S&P 500 over extended time periods, that might make sense except they don’t. And it’s not like it’s close: Over 80% of money managers miss the mark.

So why not invest in the S&P 500 Index instead? And what if you could invest in the index without sustaining any of the index’s bad years? And what if the money in the plan grew tax-deferred and then came out tax-FREE? And what if there was access to the money at all times (instead of only loans limited to $50k and payback within 5 years or 90 days after separation of service)? And what if this non-qualified retirement plan paid a few times the holder’s current cash balance at the holder’s death?

Not all Indexed Universal Life (IUL) policies are excellent but several are and they are worth considering for at least any money above an employer’s 401-k match amount, if not all of it.

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